 "Alibaba product range may power Paytm's China-to-India play")
Chinese e-commerce major Alibaba is set to display its edge in the Indian online space this year. While the group has already invested in Paytm and Snapdeal, the Chinese giant's big India play will now go beyond funding.
Vijay Shekhar Sharma, founder & CEO of One97 Communications, which owns Paytm, has kept aside $400 million for expanding its online marketplace business in India. And, Alibaba's India play will coincide with Paytm's expansion.
To take on e-commerce majors like Flipkart, Snapdeal and Amazon India, Paytm plans to push China-to-India commerce. For this, it will rely on Alibaba and other Chinese companies for their product portfolio.
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With an investment of $680 million, Alibaba Group is the largest shareholder in One97 Communications. "In 2016, we will promote our online marketplace business in a big way. China-to-India commerce will be a focus area. While competition is concentrating on selling mostly smartphones, we will expand in other verticals; there is a lot we can offer to Indian consumers," said Sharma.
Sources say Alibaba will be the support behind Paytm's China product portfolio. With this backing, Paytm will aim to become the biggest Indian player in so far as the number of sellers on the platform is concerned. With more than eight million sellers, Alibaba has the widest product range.
This is not the first time that Paytm is planning to sell Alibaba's product range. During Diwali last year, Paytm had the whole product catalogue sourced from Alibaba and the merchants from China were directly shipping products to customers in India, saving Paytm the hassle of finding warehouses.
"This is our Alibaba catalogue. We will be offering products under various categories, such as home garden, gifts, personal accessories and food," Sharma had said at the time.
With $400 million of investments to push its online marketplace expansion strategy, Paytm plans to bring 100 million stock-keeping units (SKUs) from China to India. At present, it has around 100,000 merchants on its platform. Snapdeal, by comparison, has close to 200,000 sellers, and Flipkart has around 80,000.
Paytm plans to take a multi-pronged approach to gain dominance in the market. It plans to roll out its much-awaited payments bank. It targets as many as 100 million accounts within two years of launching the bank. It also wants to increase its mobile wallet user base, at 120 million at present.
The company has kept aside $650 million for its overall expansion plans. It is banking on its 120 million mobile wallet users to target an existing customer base for its e-commerce online marketplace plans.
Apart from its investment in Paytm, Alibaba has put $500 million in Snapdeal along with Japan's SoftBank Group Corp and Foxconn.
